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Gibbons: Pay cuts preferable

CARSON CITY -- Gov. Jim Gibbons told legislators in a closed-door meeting Monday that he would prefer cutting wages of state employees to laying off a massive number of workers because of declining tax revenue.

Gibbons met in his office with five Democratic and five Republican legislators to discuss his and their concerns about his call for state agencies, public schools and universities to prepare for as much as 10 percent in further budget reductions.

State Sen. Bob Coffin, who attended by phone from Las Vegas, said Gibbons repeatedly stated that each 1 percent cut in salaries saves the state $33 million and that he prefers cuts to layoffs.

Assemblyman Lynn Stewart, R-Henderson, said he told the governor that if salaries must be cut, it should be carried out in an equitable manner.

He said some state employees are receiving 4.6 percent less pay because of a one-day-per-month unpaid furlough plan approved by the Legislature, while others have not been furloughed at all.

But Coffin, D-Las Vegas, said he kept telling the governor to use the $160 million line of credit authorized by the 2009 Legislature in lieu of making reductions.

The governor wants agency heads to submit lists by Jan. 5 showing how they would make 6 percent to 10 percent reductions.

A 10 percent cut would save the state $436 million between March 2010 and June 30, 2011, the end of the state's two-year budget cycle.

Last week Clark County Schools Superintendent Walt Rulffes said that kind of reduction would mean laying of 1,000 teachers. He prefers shortening the school year. It also would mean laying off 2,000 state employees, according to the leader of a state employee labor organization.

Unless the economy worsens, Coffin said the governor should not have to call the Legislature into a special session to make budget reductions.

He said the $160 million loan would help state government make it through 2010 without spending cuts.

"We can defer it to (the) next session unless the bottom drops off," Coffin said.

He noted that Sheldon Adelson, chairman of Las Vegas Sands Corp., said last week he expects convention business will bounce back in 2011.

Gibbons, however, opposes using the line of credit because he does not want the state to start borrowing to handle its ongoing expenses.

Nevada already has received a $264 million loan from the federal government to cover paying unemployment benefits to a record number of laid-off workers and probably will have to borrow nearly $1 billion more in 2010.

This borrowing eventually must be paid back -- either through a higher unemployment tax on employers, or by a state appropriation.

The governor called for agencies to plan for additional reductions after a state budget office report found tax revenues were $67 million short of projections in the July through September quarter. The state operates under a $6.9 billion, two-year budget.

Stewart, who also attended the Monday meeting by telephone, expressed reservations about borrowing more money.

"If you borrow, you have to pay it back," said Stewart, R-Henderson. "You have to be careful about digging even a deeper hole."

Stewart said he and other legislators are concerned about across-the-board cuts in state spending.

He said you cannot reduce spending for the Department of Corrections or the Nevada Highway Patrol, or the public's safety could be jeopardized.

Stewart did not offer any suggestions on where reductions could be made.

Robin Reedy, Gibbons' chief of staff, said the governor plans to meet again with legislators on Jan. 5.

She, Coffin and Stewart said Monday's meeting was cordial without any political sniping.

The governor and Democratic legislators have been trading insults consistently since the legislative session when he vetoed a record 48 bills and legislators overrode 25 of them.

Stewart predicted Gibbons won't call a special session before March.

The governor has stated he will call legislators into session sometime before June so they can change a state law that prevents Nevada from qualifying for $175 million in federal Race to the Top grants for education.

Members of the media were invited by the governor's communications director to attend the last 15 minutes of Monday's two-hour chat between the governor and legislators. But the meeting broke up early, and Gibbons left an hour into the meeting for another engagement in Reno, according to legislators.

Daniel Burns, Gibbons' communication director, apologized, saying he was not aware Gibbons had another meeting and he expected the chat with legislators would last longer than it did.

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